Asset Quality and Financial Performance of Deposit Money Banks in Nigeria

Godwin Emmanuel Oyedokun () and Osho Lukman Ayodeji ()
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Godwin Emmanuel Oyedokun: Department of Management and Accounting, Postal: Lead City University, Ibadan, Nigeria,, https://www.lcu.edu.ng/index.php/lead-city-journal-of-the-social-sciences
Osho Lukman Ayodeji: Department of Accountancy, Postal: Moshood Abiola Polytechnic, Abeokuta, Nigeria,, https://www.lcu.edu.ng/index.php/lead-city-journal-of-the-social-sciences

Lead City Journal of the Social Sciences (LCJSS), 2023, vol. 8, issue 3, 24-47

Abstract: The performance of a banking institution is largely driven by its ability to increase its customers' patronage, retain them and manage its assets and liabilities to enhance optimal returns.This can be done through banks maintaining adequate capital and quality assets for better performance. Even though banks are highly regulated and capital adequacy requirements have been in place since 1988 in Nigeria, many banks have experienced poor performance, as indicated by high levels of credit risk, poor-quality loans and a high incidence of non-performing loans. It is, thus, imperative to ascertain the effect of asset quality on the financial performance of Deposit Money Banks (DMBs) in Nigeria. This study employed ordinary least square regression analysis with emphasis on fixed effect and random effect models. The findings of this research revealed that non-performing loans have a negative and not significant effect on the financial performance of DMBs in Nigeria (â = - 0.022478, P >0.05), and loan loss provisions have a negative significant effect on the financial performance of Deposit Money Banks in Nigeria (â = - 0.002954, P

Keywords: Assets Quality; Non-performing loans; Loan loss provisions; Financial performance; Return on assets (search for similar items in EconPapers)
Date: 2023
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